India and China Poised to Become API Contract Manufacturing Hub with Cheap yet Skilled Labor

Published By : 13 Oct 2016 | Published By : QYRESEARCH

Any drug is composed of two components. The first one is Active pharmaceutical ingredients (API) which are the most important ingredient while the other one is known as excipient. Excipients are the inactive substances in a drug whereas API is the chemically active substance which is meant to perform the desired effect on the body. API are also referred as ‘bulk pharmaceuticals’ and are considered as the base of the industry. North America contributes to more than 45% of the global market for API contract manufacturing but production is not very cost efficient in western countries. Emerging economies of Asia Pacific, India and China in particular, are fast growing as the hub of API contract manufacturing.

According to Boehringer Ingelheim GmbH, these two countries already account for manufacturing of 40% of the APIs used in the U.S and percentage is expected to double up in next ten years. Here are a few reasons why India and China are such lucrative API manufacturing destination for several pharmaceutical companies.

  • Cheap and yet skilled labor: India and China contribute close to half of world population and hence, cost of labor has always been cheaper but what has changed significantly in recent times in these two countries is the level of education which is improving the skill levels of the labors and serving the desired API contract manufacturing tasks.
  • Stable government: India is world’s largest democracy and although China is partly communist country, governments in both these nations are stable which augurs well for investments by API contract manufacturing companies.
  • Government policies: Both these nations are focused on growing foreign investments and are regularly making policies that are favorable for investors. Trade relationships are being maintained as per high esteemed diplomatic manner and frequent tax benefits are provided.
  • Market is already matured: Several leading pharmaceutical companies have already established their API contract manufacturing production in these two nations which should help build confidence into future investors.

Conclusion: With trade and transport sector in healthy conditions, there is no reason why API contract manufacturing companies should not look at India and China for their production purposes.

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